Thursday, 30 May 2013

Kazakhstan Prepares For "Innovation Revolution"

Published in Field Reports

by Georgiy Voloshin (05/29/2013 issue of the CACI Analyst)

On May 22 and 23, Kazakhstan’s capital hosted two high-level annual events that have already become a local tradition. On Wednesday, President Nazarbayev chaired the 26th meeting of the Foreign Investors Council which is comprised of representatives of government bodies in charge of the country’s economic development and foreign companies actively investing in Kazakhstan. It was established in 1998 and initially included only 11 permanent members. Fifteen years later, the Council has expanded to 27 permanent members and also counts several observers on its board, such as the CEO of Glencore International plc Ivan Glasenberg. While Kazakhstan’s economy has attracted massive investment from hundreds of foreign entities during the past twenty years, the Council is open exclusively to the largest investors whose gross input is measured at US$ 500 million for those operating in the energy sector and at least US$ 125 million for non-extractive fields. 


In line with the “Kazakhstan-2050” strategy unveiled by Kazakhstan’s president in December 2012, this year’s gathering was dedicated to the issue of innovative development, with foreign investors expected to play a leading role in the promotion of technological transfers and joint high-caliber R&D programs. Moreover, Kazakhstan is now actively engaged in the implementation of a broad set of measures aimed at enabling the birth of a “green economy” that would be based on the wide use of environmentally-friendly technologies and energy-saving schemes. In this vein, President Nazarbayev brought up a string of new initiatives, such as his idea of the “three 7s.” He thus instructed the government to sponsor the relocation of the world’s seven brightest researchers to Kazakhstan not only to boost local scientific activities but also, and more importantly, to endow them with high-quality content.

The Kazakhstani government is also entrusted with the task of ensuring the availability of technology-intensive orders from industries for at least seven Kazakhstan-based companies. This strategy aims primarily to substitute local knowledge for imported technological solutions and would therefore permit to test the efficiency of national research laboratories and innovative entities confronted with real-life challenges. Finally, the country’s executive should also support the establishment of not fewer than seven start-up companies specialized in the most competitive fields. The idea of creating a special territory for innovations modeled on the California-based Silicon Valley has lately gained ground not only in Kazakhstan but also in neighboring Russia which now has its Skolkovo innovation center.

During his meeting with the Foreign Investors Council, President Nazarbayev also ordered the establishment of a special venture capital fund worth US$ 200 million, which can potentially be increased up to US$ 1 billion. This fund will be sustained by annual 1-percent tax payments introduced on January 1, 2013 for all subsoil users who are hence required to pay more attention to the R&D dimension of their lucrative businesses. Kazakhstan’s president furthermore suggested awarding on a yearly basis US$ 100,000 grants to seven researchers and scientists whose work is deemed to be of particular value for the country’s “innovation revolution”. Thus, the “three 7s” strategy is due to acquire an additional fourth prong.

Finally, Nazarbayev mentioned the need to set up a new world-class university, alongside the Nazarbayev University of Astana. This new educational institution should develop teaching and research expertise in agriculture and will be created on the basis of the Kazakh Agro-technical University. Contrary to classical universities, it will operate in close cooperation with territorial units in every agricultural region as well as private farms in order to share the best technological solutions with producers.

On May 23, President Nazarbayev opened the sixth annual session of the Astana Economic Forum. This high-level gathering saw participation from several Nobel Prize laureates in economics, former and acting political leaders, such as Italy’s former Prime Minister Romano Prodi, and UN officials, including the chairman of the 67th session of the UN General Assembly, Vuk Jeremic. Although former U.S. President Bill Clinton was initially expected to attend, his name never appeared on the distinguished speakers’ list. This year’s novelty was the organization of a special panel dubbed the World Anti-crisis Conference, held for the first time on the margins of the Astana Forum. It featured, among other famous guests, the disgraced ex-chief of the International Monetary Fund, Dominique Strauss-Kahn, who delivered a lecture regarding the current economic and debt crisis in Europe. As in previous years, Nazarbayev called on world leaders to implement deep reforms of their countries’ financial sectors. He also proposed to expand the activities of the Astana Economic Forum’s G-Global online platform to ensure a better exchange of ideas on how to improve global economic governance.

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